True Essay Example

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Apple Two Enterprises expects to generate sales of $5,950,000 for fiscal 2014; sales were$3,450,000 in fiscal 2013. Assume the following figures for the fiscal year ending 2013: cash $70,000; accounts receivable $250,000; inventory $400,000; net fixed assets $520,000; accounts payable $235,000; and accruals $155,000. Use the percent-of-sales method to forecast cash for the fiscal year ending 2014. $120,725

Explanation: 3450000 / 70000 = 0.0203 x 5950000 = 120,725
Metals Corp. has $2,575,000 of debt, $550,000 of preferred stock, and $18,125,000 of common equity. Metals Corp.'s after-tax cost of debt is 5.25%, preferred stock has a cost of 6.35%, and newly issued common stock has a cost of 14.05%. What is Metals Corp.'s weighted average cost of capital? 12.78%

Project Sigma requires an investment of $1 million and has a NPV of $10. Project Delta requires an investment of $500,000 and has a NPV of $150,000. The projects involve unrelated new product lines. What is your evaluation

1. The goal of the firm should be

b/ maximization of shareholder wealth

2. An example of a primary market transaction is

a. a new issue of common stock by AT&T

3. According to the agency problem, _________ represent the principals of a corporation.

b/ Managers

c/ Managers

4. Which of the following is a principle of basic financial management?

a.  Risk/return tradeoff

5. Another name for the acid test ratio is the

b/ quick ratio

6. The accounting rate of return on stockholders’ investments is measured by

c/ operating income return on investment

7. If you are an investor, which of the following would you prefer?

b/ Earnings on funds invested compound daily

8. The primary purpose of a cash budget is to

c/ provide a detailed plan of future cash flows

9. Which of the following is a non-cash expense?

a. Depreciation expenses

10. The break-even model enables the manager of a firm to

c/ determine the quantity of output that must...
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